MNI POLICY: US Cos. Want 13-3 Fed Loans, $300B Payroll Tax Cut

By Evan Ryser

     WASHINGTON (MNI) - The largest U.S. business lobby on Monday asked

President Donald Trump's administration to authorize special Federal Reserve

lending to corporations and a three-month payroll tax exemption worth $300

billion.

     The Chamber of Commerce made the request the day after the Fed cut rates to

around zero and said it wouldn't seek extra legal powers from Congress to boost

the economy, and the same day Trump touted a G7 pledge to do whatever it takes

to fight the COVID-19 outbreak. 

     In a letter to President Donald Trump, Congressional leaders, Treasury

Secretary Steven Mnuchin, and Fed Chair Jay Powell, the Chamber urged an

expansion of the use of the Fed's discount window through section 13(3) of the

Federal Reserve Act. 

     The chamber urged policy makers to enact legislation enabling the creation

of credit facilities to provide loans and loan guarantees to employers with more

than 500 employees experiencing significant revenue loss as a result of the

Coronavirus.

     "Legislation should expand the use of the Federal Reserve Discount Window

through the liberalization of the restrictions of Section 13-3 of the Federal

Reserve Act."

     These emergency powers to lend were substantially revised after the

Dodd-Frank financial crisis reform law was enacted in 2010. The Fed Board of

Governors must have five votes and the Treasury Secretary must approve to

authorize a Fed Reserve Bank to lend and lending should be "broadly based" with

at least five entities eligible to borrow. 

     The Chamber also called for legislation cancelling the payment of all

payroll taxes typically paid by employers for the months of March, April, and

May. These taxes companies pay are used to support Social Security, Medicare and

unemployment insurance, and the contributions are more than USD 100 billion a

month.

     The chamber further called for legislation expanding and streamlining loan

programs for small businesses with fewer than 500 employees experiencing revenue

loss as a result of the coronavirus with a Small Business Administration

disaster loan program.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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